Since 2010, Clearwire Has Presented to the Public Valuations of Its Spectrum Comparable to as Much
as $1.25 per MHz Pop or as Much #$%$ Billion Overall
Between 2010 and 2012, officers of Clearwire have presented to the public valuations of spectrum
comparable to the holdings of Clearwire. These comparable valuations have been in the range of $0.25 to
$1.25 per MHz pop. These valuations are for spectrum alone, not for the other assets of the Clearwire. This
implies spectrum valuations in the range of $11.7 billion to $55.1 billion.122Clearwire executives never
suggested to the public that its spectrum was worth as little as $0.21 per MHz pop, much less $0.11 per MHz
pop. As the Clearwire executives correctly noted, spectrum valuations have been consistently increasing. There is no reason to believe that the valuation in 2013 would be less than the valuation in previous years. Table 4 summarizes the specific presentations by Clearwire.
It is amazing how some people think Cleawire spectrum is worth $1.25 “uniformly” across geographic areas. Dish is offering $0.21 /MHZ/POP while VZ is also offering about the same for the best pieces of Clearwire’s spectrum. I bet the remaining spectrum (perhaps a very large chunk) are worth much less like a $0.07 MHz/POP.
Spectrum is like real estate in how its made valuable: If it is raw acreage outside of the major thoroughfares with no buildings on it, it is priced as such - for its potential. Then when a company, call it New Clearwire Development and Land Trust Co. comes along with some investment partners and a partner developer, call them Sprint, puts up several billion and a plan to put up new buildings that are projected to attract 24 million inhabitants, the land value naturally soars doesn't it?
What happens to the land value if after about five years the buildings sit mostly unoccupied but still cost a lot to maintain? With only 1.1 million inhabitants paying for the city that was built to house 12 million full time inhabitants and another 12 million transients (Sprint subscribers), the land remains largely unused and unprofitable. Would you want to build a new building on that space? OK the analogy breaks down about there because 'there are no lines in the sky' on who uses spectrum, but the principle is the same: the value has gone down because the spectrum has been unprofitable. Expectations are that it will become profitable after once a new round of investment of billions is made... but the ground has been tainted.